A New Plymouth man is devastated after losing $50,000 which was meant to be his daughter's inheritance in an online investment scam.
John, not his real name, considers himself financially and technologically savvy. Last year, the 63-year-old was looking to invest some money when he stumbled across a seemingly legitimate company offering what looked like a good, but not too good to be true bond investment scheme.
John said the company, which called itself Magnitude Financial Group, looked legitimate with a slick website and no obvious red flags.
He contacted them expressing his interest. The company sent him a glossy brochure and he spoke to a woman on the phone with a "posh accent".
The company also had a New Zealand phone number, email and address listed, all of which put John at ease.
While John admitted he didn't do as much research into the company as he should have, he said it was clearly trying to imitate a legitimate investment company. Included in the email correspondence were links to articles in a respected news website about a legitimate company with a similar name.
John said the professional nature of the interactions with the company also made him feel confident it wasn't a scam.
"When they sent out the documents that contained information about a range of bonds that could be invested in, they were really high-end portfolios and all that sort of thing," John told Newshub.
Feeling confident in the communication, he decided to invest $50,000. After he sent the money he didn't think much more of it. Until he had a spare moment late last year and decided to check how his investment was going. That was when John realised something wasn't right. He tried to log in online to check on his portfolio but couldn't.
"I am one of these investors that just puts the money in and doesn't look too often. So I only realised [the money was gone] when I decided to log in and check on how things were going and I wasn't able to do that."
He was devastated, especially because the money was supposed to be an inheritance for his daughter.
"It was $50,000, so it was quite a bit," he told Newshub. "It was quite a shock. I had to actually deliberately work on myself and my attitude over a period of days to reconcile myself to what had gone on because I didn't want to let it sink me."
In hindsight, John said there were probably some warning signs he should have paid more attention to.
"There were a couple of red flags on the way when I looked back. One of them was in the final throes of getting ID and everything…They actually asked for a scan of both sides of a debit card, which was quite unusual. But I was very close to the end of it [and didn't question it]. "Then the other big thing about this was the money was actually transferred to another [New Zealand bank account number]."
John filed a police report but has accepted he will probably never get the money back. Instead, he's focusing on warning others to be careful when investing online.
"It really has been a lesson. I've been investing for a while now, but I think once you're in the online area, part of your guard is dropped because you're not requiring that face-to-face contact."
While he hasn't fully been put off investing, he is "far more careful" now.
John might not be the only one to fall victim to the scam either. Earlier in the year, the Financial Markets Authority (FMA) issued a warning about the company, saying it was offering "unrealistically high returns".
"We are concerned that Magnitude Financial Group is operating a scam via their websites magnitudefinancialgroup.co.nz and magnitudefinancial-nz.co," the FMA said on its website.
The FMA said it had several concerns about the company including promising "unrealistically high returns that have not been substantiated" and claiming to be working with SBS Bank and Westpac - which the banks say isn't true.
"Magnitude Financial Group is not a registered financial service provider in New Zealand and is therefore not permitted to provide financial services to New Zealand residents. We recommend caution if dealing with this entity," the FMA said.
A Westpac spokesperson told Newshub "the product being offered by Magnitude Financial is not a legitimate Westpac product".
"We urge anyone being offered a Westpac financial product by a third-party to check with us before investing."
Police told Newshub they can't comment on whether a specific individual or organisation is under investigation.
Magnitude Financial Group's website can no longer be reached and the phone number listed is invalid.
